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UBOs no longer anonymous

On Friday 31 March 2017, a draft bill on the registration of ultimate beneficial owners (UBOs) in the Netherlands was published for consultation purposes. The introduction of the UBO register is required pursuant to the Fourth EU Anti-Money Laundering Directive. Although this is not mandatory under the directive, the Netherlands has chosen to make the register publicly accessible. The UBO register will be part of the Trade Register and will therefore be maintained by the Chamber of Commerce.

The consultation will be open until 28 April 2017. Under the directive, the deadline for the introduction of the register is 26 June 2017. Following the entry into effect of the relevant legislation, the entities required to register information on their UBOs will have 18 months during which to do so.

Who is a UBO?

Under the draft bill, a UBO is a natural person who ultimately owns or controls an enterprise or legal entity. The UBO registration obligation will therefore apply to a wide range of legal entities, partnerships and other organisational forms (all of which will hereinafter be referred to as "entities").

The consultation documents do not specify a threshold/percentage of ownership or control for the purposes of determining who will be considered a UBO. A decree will subsequently be issued specifying, for each type of entity, the criteria for classifying persons as UBOs of such entities. As there is a reference to the directive, it appears (for now) that a threshold of 25% or more will apply. It should be pointed out, however, that the European Commission has proposed lowering the threshold to 10% in certain cases.

Where no UBOs can be identified through the application of the ownership/control criteria, individuals who are senior managing officials of the entity (including directors) will be entered in the register as UBOs of that entity.

Registration of UBO information

The UBO registration obligation will apply to a wide range of enterprises and legal entities. Only a few types of entities, most notably foreign entities, will not be subject to the UBO registration obligation. However, the possibility of extending the obligation to mutual funds is currently being explored.

The obligation to register the UBO(s) of an entity will be imposed on the relevant entity itself. As an entity will be dependent on its UBO(s) to obtain the necessary information, UBOs will be under a duty to cooperate in this regard.

Failure to register complete and accurate UBO information will constitute an offence under the Economic Offences Act, punishable by imprisonment for a maximum term of two years, community service or a fine of up to € 20,500.

Accessibility of UBO information

A distinction is made between different types of parties in terms of the accessibility of UBO information:

A large number of different authorities, to be designated as "competent authorities" by means of a separate decree (these will include, for example, the Public Prosecution Service, the tax authorities and the Financial Intelligence Unit) will at all times have full access to all information. The same will apply to financial intelligence units and competent authorities of other EU member states.

"Obliged entities" under the Money Laundering and Terrorist Financing Prevention Act (the "Wwft") – such as lawyers, civil law notaries and banks – will have access to a more limited amount of UBO information. For example, they will not be able to see the exact size of UBOs' beneficial interests; instead, these will be expressed only in ranges (25%, 50%, 75% and 100%).

All other parties will have access to the same limited amount of information as Wwft obliged entities, except that they will not have access to the personal data of minors or persons otherwise lacking in legal capacity. Furthermore, such parties' access to a UBO's personal data can be entirely blocked if the accessibility of this data would expose the UBO to the risk of fraud, kidnapping, blackmail, violence or intimidation. In the request for the blocking of such data, the UBO must show that it is likely he/she will be exposed to one of the above risks if the data remains accessible.

All parties other than competent authorities and the Financial Intelligence Unit will be registered and required to pay a fee when accessing the register. A UBO will be able to obtain information from the Chamber of Commerce on the categories of parties that have accessed his/her UBO information, but not on the identities of individual parties.

It will be possible to subscribe to receive updates of changes in the register.

Competent authorities and the Financial Intelligence Unit will have the additional option of searching the register for UBO information by name of individual.

We will inform you of our response to the consultation on the draft bill. There is also a page on our website with updates on the registration of UBO in the Netherlands, anti-money laundering legislation and the introduction/status of UBO registers in other EU countries. In addition, you will find an overview – which we will be regularly updating – of relevant previous newsletters published by us and information from the government.